Local credit institutions had settled more than VND204.4 trillion (US$8.8 billion) worth of bad debts as of January, accounting for 40.1% of the total, said Nguyen Thi Hong, deputy governor of the State Bank of Vietnam (SBV).

Nguyen Thi Hong, deputy governor of the State Bank of Vietnam, speaks at a press briefing in Hanoi on April 1

At a press conference held on April 1, on monetary policy and banking sector performance in the first quarter of this year, Hong said that the sector had settled bad debts totaling VND113.4 trillion last year alone.

Since the National Assembly adopted Resolution 42 on the settlement of nonperforming loans at credit institutes in June 2017, obstacles to the settlement of bad debts have been partly removed. However, the handling of mortgaged assets for these loans has remained as tough as ever.

Pham Thanh Ha, head of the Monetary Policy Department of the central bank, was cited by Thoi Bao Ngan Hang as saying that the central bank's monetary policy is aimed at stabilizing the local forex market and putting inflation under control.

Regarding interest rates, Ha said that the annual rates were kept at 6%-9% for short-term loans and 9%-11% for medium- and long-term loans.

Although the central bank had set the credit growth target for each commercial bank, it has directed commercial banks to expand credit in a safe and effective manner to assist local enterprises to access capital for business activities, Ha added.

By March 25, the country's credit-to-gross domestic product ratio grew by some 2.28% over late last year.

For his part, Tran Van Tan, deputy head of the Department of Credit for Economic Sectors at the central bank, said that the central bank has asked local commercial banks to channel capital into production and business activities, especially priority sectors; tighten lending to high-risk sectors; and help fight loan sharks, news site Vietnamplus reported.

In the coming time, lower growth in world powers, such as the United States and China, will likely affect Vietnam’s export and foreign investment attraction, SBV deputy governor Hong said.

Therefore, the central bank worked out a roadmap to limit foreign currency loans in line with the Government’s instructions.